In a company's capital structure, the terms authorized shares, issued shares, and outstanding shares refer to different stages in the life cycle of shares.

Authorized shares represent the maximum number of shares a company is permitted to issue, as specified in its articles of incorporation. This figure is a strategic decision made by the company's board of directors and can be amended through shareholder approval.

Issued shares are the portion of authorized shares that the company has actually issued or sold to investors. When a company goes public or conducts a private placement, it issues shares to raise capital. These issued shares may or may not be fully subscribed, meaning not all of them are necessarily sold.

Outstanding shares, on the other hand, are the shares that are currently held by investors. It includes all the issued shares that are in the hands of shareholders, both institutional and individual. Outstanding shares are crucial for calculating metrics such as earnings per share (EPS) and market capitalization.

In summary, while authorized shares set the upper limit defined by the company's charter, issued shares represent what has been sold, and outstanding shares are the ones currently held by investors, actively traded in the market. This distinction is essential for understanding a company's financial structure and market valuation.